Freight Audit & Payment

UNDERSTANDING THE TRUE COST OF YOUR TRANSPORTATION SPEND

The cost-savings benefits of outsourcing freight bill payment and audit are well-documented, but it’s the support data ACS provides that delivers the real payoff.

According to an Aberdeen Group report, Winning Strategies for Transportation Procurement & Payment, (February, 2007), shippers say it costs an average of $10 to process a freight bill internally. ACS can do it for much less.

ACS provides freight bill auditing and payment, an activity that falls outside most shippers’ core competencies requiring considerable staff . Our ability to provide accurate freight business analytics and reduce overhead coupled with our excellent Customer Service is the reason our Customers choose ACS.

ACS’ FREIGHT AUDIT AND PAYMENT

Our Internet-based Freight Audit and Payment system (FAP) traditionally produces cost savings between 2% to 5% of the freight spend and improves carrier-shipper relationships through our collaborative tools for document management, payment processing and exception handling.

Shippers and carriers can transmit documents directly to ACS, via Electronic Data Interchange (EDI), E-mail or traditional hardcopy mail. When the carrier’s freight bill matches with the shipper’s contract, and proper required supply chain data has been received, the payment is issued automatically.

When the match fails, FAP instantly alerts the ACS Customer Service Team, initiating real-time resolution to all exceptions, or alerts Customer in accordance to the agreed Standard Operating Procedure (SOP).

IMPROVED FREIGHT BILL MANAGEMENT PRACTICES

With our powerful FAP, every freight bill is captured and visible as soon as it is received. This is possible for all freight bills to any subsidiary, division, or department of a Customer’s organization.

Through well-defined sets of rules our Customers can enforce precise policies to automate payment for each freight bill. Pre-audit payment and reconciliation rules can include:

  • Two, three, and four-way matching (PO, freight bill, BOL, contract)
  • Line items checks on SKU numbers, GL codes, rates and units
  • Tolerances (Based on Customer-specific established Tolerance policies)

SIMPLIFIED A/P OPERATIONS

Instead of reviewing and paying several hundred carriers each week, our Freight Audit and Payment Customers have only one invoice and payment to manage – the payment to ACS.

ACS deconsolidates this payment into appropriate smaller sums and expedites every amount to its corresponding carrier in accordance with Customers’ pre-negotiated terms.

At ACS these transactions occur hundreds of times each month, every time with predictable 100% accuracy.

ROUTING GUIDES AND EXCEPTION REPORTING

Routing deviation occurs when a vendor in our Customer’s supply chain has used a non-authorized carrier on a specific traffic lane than was originally indicated in the Customer-Vendor contract.

Customers often prefer to use pre-negotiated carriers for specific lanes in order to take advantage of lower and consistent shipping rates, especially on LTL shipments. A complete listing of which carriers should be used based on mode of transport and trade lane is referred to as the Routing Guide.

ACS tracks all deviations that occur and determines resulting lost savings. Our Customers have the ability to take action with violators that they feel are appropriate, using this data provided by ACS.

ACCURATE FINANCIAL GENERAL LEDGER (GL) CODING

The key components in ensuring accurate financial reporting is consistent, automated expense classification and the ability to prove these policies have been successfully enforced.

ACS provides strict separation of responsibilities making sure that the person responsible for assigning the rules is not the same person responsible for approving the payment.

ACS programs client-specific algorithms logic to ensure accurate GL codes are assigned to each shipment and/or cost element.

SUPERIOR BUSINESS INTELLIGENCE

Apart from improved reporting and tangible cost savings, ACS provides its FAP Customers with opportunities to:

  • Build a central database of freight data at corporate, divisional and specific location levels
  • Obtain complete and scalable visibility to the entire freight network
  • Optimize the supply chain through customized reports and modeling
  • Significantly enhance procurement capabilities

LEVERAGING INSIGHT INTO POWERFUL PROCUREMENT

By using FAP, our Customers obtain indispensable business analytics, enabling them to truly understand where their costs break down, and which lanes of their supply chain cause variability.

Analysis may uncover possible efficiencies by scrutinizing traffic lane patterns for single or multimode shipments and reveal new cost-cutting opportunities, which can drive more effective procurement and contracting activities.

On average, Customers can obtain an additional 8.8% overall reduction of their freight budget by using a more sophisticated procurement approach.

ACS VALUE BENEFITS

By teaming up with ACS for your freight audit and payment services, you will enjoy the following benefits:

  • Increased accuracy of payment
  • Elimination of overpayment
  • Faster processing of freight invoices
  • SOX compliance
  • One weekly consolidated invoice
  • Detailed general ledger account coding
  • EDI administration
  • Supplier compliance of the Routing Guide
  • Reduced administrative costs
  • Reduced freight costs

FEATURES

ACS’ audit, payment and data services feature the following capabilities:

Audit and Payment - Match a pre-rated shipment record with the actual freight bill provided by the carrier via a load control number created at the time the shipment is dispatched. ACS performs an audit check in situations where there are no pre-rated files.

Consolidated Invoice - Reduce thousands of freight bills into one master invoice for the shipper, eliminating the need for numerous contacts with carriers.

Routing Guides - Identify which mode and carrier the shipping location should use for a specific shipment.

Supplier Compliance - Verify that suppliers are using the preferred carriers and report compliance problems.

Full Paperless Transportation Logistics Process - ACS will convert carriers to EDI or E-mail format. ACS obtains 90% of the freight invoices electronically from the carriers.

GL Account Coding - Extensive coding capabilities for all your accounting needs. Financial accruals by G/L account code are accessible on unpaid shipment data in the system and average or actual carrier rates, as applicable.

Carrier Inquiry System - Carrier accesses to the web, visibility to have payment status, or receipt status, or to call a Customer Service Representative for the information.

Duplicate Payment Verification - Duplication checks are made at the bill of lading level and invoice level.

Online Tools - Secure web access to all data 24/7 based on Customer specific access rules.

Approximately 55 percent of shippers currently outsource to freight payment providers, according to the 11th Annual Third Party Logistics Study by Capgemini.

Customers turn FAP to 3rd parties as the activity falls outside most shippers’ core competency and requires considerable staff . “It’s more about providing business analytics,” says Adrian Gonzalez, director, Logistics Executive Council, for ARC Advisory Group.

“Through the use of spreadsheets and online tools, freight payment companies provide good business analytics to shippers, enabling them to look at how their costs break down and where variability is coming from.”

That percentage will grow as shippers catch on to the impact such value-added services have on their business, predicts Clifford Lynch, author, consultant, and principal of C.F. Lynch & Associates. Providers are racing to compete on the sophistication of their technology and the insights it can provide.

ACS is 90% EDI

This is an impressive statistic in the Freight Audit and Payment industry, especially for a company as large as ACS.

Our key objective is to not only increase the number of freight invoices received electronically, but to improve the “closing ratio” of these transactions. A high closing ratio indicates that the carrier is transmitting accurate information on behalf of our Customers or that ACS is able to auto correct the carrier errors.

These include accurate Customer-specific freight charges, fuel surcharges, accessorials, and complete required information, such as purchase order number, date and time of shipment pick-up and delivery, and even zip codes and correct spelling of cities.

Accurate electronic transmissions are of benefit to our clients as they can receive logistics information faster for SOX compliance and financial accrual purposes. Freight carriers also benefit with faster payment cycles, faster payment and a satisfied Customer.

SARBANES-OXLEY ACT, FINANCIAL CONTROLS IN AUDIT AND PAYMENT

The Sarbanes-Oxley Act of 2002 (SOX) is a lengthy government regulation containing 11 titles that define stringent standards for financial reporting responsibilities as well as the criminal penalties for failure to meet those responsibilities.

SOX makes it mandatory for all public companies to improve their record and document management practices, accelerate financial reporting through automation, and strengthen financial process performance policies. SOX holds CEOs and CFOs personally responsible for any misrepresentation of company performance.

ACS Services as they relate to SOX include:

  • Compliance with SOX demand for accelerated reporting speed at which our Customers are able to file financial documentation.
  • Documented processes are demonstrated and available during a SOX audit with explanations of how the software handles rating, duplicate invoices and what communications we use with Customers and carriers.
  • Duplicate payment controls are built into the ACS system to recognize duplicate invoices that are transmitted electronically and/or through manual entry.
  • Enables your company to set extremely tight controls around who does what in the payment process Sarbanes-Oxley Act.
  • Every invoice is captured and visible the moment it is entered or received electronically by ACS.
  • Highest security control to ensure that your data and your financial interests are secure.
  • Full audit against negotiated freight contract base rates, fuel surcharges, accessorials, and contract dates.
  • Assign general ledger accounting codes to every purchase of freight and related charges based upon criteria that each customer establishes.
  • Provides a complete audit trail for each invoice payment processed so you can prove that payment was made according to the corporate polices your company established.
  • Supports a strict separation of duties so that the person building the assignment rules is not the same person who approves invoices for payment.
  • Tolerances can be set on a customer / mode of transportation basis.
  • Verification and process documentation that all freight invoices are audited electronically or manually against negotiated freight contracts.
  • Verification of process handling when no rates are found on file.

CONCLUSION

Through our advanced technology, we leverage Freight Audit and Payment in order to organize and monitor your freight expenses, significantly reduce your General Ledger coding and accounting costs, build a central database of logistics data, give you complete and scalable visibility to your entire logistics network, provide indispensable business intelligence, and significantly enhance your procurement capabilities.